EconomicCrisis.US

Toronto, ON, Canada, — U.S. leaders are more concerned about their prestige, which has nose-dived due to the decline of the U.S. dollar, than the currency decline itself.

Although the decline may be a boon for importers of U.S. goods, because they become cheaper, it is a concern for nations who park their earnings in U.S. dollars. For them a decline denotes a fall in the value of their investments.

So investors are increasingly looking for other options, like gold and silver, to hedge their U.S. dollar currency investments if the decline becomes irreversible.
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Since rolling out his anti-Great Depression policies in 2002, Ben Bernanke has had the dubious distinction of being the major contributor to the worst financial and economic crisis to hit in the post-World War II era. His theory and practice was to fight an enemy that did not exist in 2002 – deflation. As a result, he ended a long period of economic prosperity.

As chairman of the Council of Economic Advisors and a Federal Reserve governor, Bernanke strongly supported policies that pushed the federal funds rate to 1% and inundated banks with liquidity during 2002-2005.
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Like Michael Moore, I have a “love story” to tell about capitalism. Unlike Mr. Moore, I’m not trying to fire up the choir or ambush the executive suite. Also, I’m not sure I share the filmmaker’s conspiracy theories about the roots of the financial crisis.

Mr. Moore, in an open letter on his Web site, describes his latest movie as “two hours of a tragicomedy crime story starring a bunch of vampires who just weren’t satisfied with simply destroying Flint, Michigan — they had to try and see if they could take down the whole damn country.”

Most of us don’t see it that darkly and fewer of us would consider his angry rant “love.”
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The United States may face a series of asset price bubbles and a rerun of the financial crisis unless it lets the dollar fall “at least” another 25 percent, economist Bernard Connolly said on Tuesday.

Because fierce international resistance will likely prevent such a large dollar devaluation, Connolly told Reuters the Federal Reserve may instead have to extend indefinitely its artificial support of a struggling U.S. economy by purchasing another $2 trillion in U.S. Treasuries and federal housing agency debt.

Some investors have started to watch Connolly’s forecasts. In February, he accurately predicted the Fed would have to buy Treasuries to boost the money supply and reduce borrowing costs for companies and households.
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